Emergent BioSolutions (EBS 3.40%) wrapped up the year with a solid increase in fourth-quarter revenue, driven by new products it acquired over the last year. Timing of shipments of its bioterrorism defense products also affected the year-over-year comparison.
Emergent BioSolutions results: The raw numbers
|
Metric |
Q4 2018 |
Q4 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$270.7 million |
$193.8 million |
40% |
|
Income from operations |
$11.2 million |
$53.1 million |
(79%) |
|
Earnings per share (EPS) |
($0.07) |
$0.67 |
N/A |
|
Adjusted EPS |
$0.75 |
$0.74 |
1.34% |
Data source: Emergent BioSolutions.
What happened with Emergent BioSolutions this quarter?
- Sales of Emergent's biggest product, BioThrax, were up 26% year over year in the fourth quarter, but that was just due to the timing of deliveries to the strategic national stockpile. For reference, sales of the anthrax vaccine were down year over year in the third quarter because less product was shipped in that quarter.
- Newly acquired Narcan, which treats drug overdoses, brought in $41.7 million in sales.
- Sales of "other" products, a category that includes everything else, brought in another $41.4 million, down 24% year over year. Management didn't go into much detail, but the catchall category was up substantially for the entire year, so the quarterly decline was probably another timing issue.
- Contract manufacturing added $26.9 million, 66% higher than the year-ago quarter.
- Revenue from contracts and grants was also up 66% thanks to increased government funding for the development of NuThrax, Emergent's follow-on to BioThrax.
- The company recently submitted an Emergency Use Authorization for NuThrax with the Food and Drug Administration. Once it receives approval, it can start the procurement phase of the contract and begin shipping the product to the strategic national stockpile.
Image source: Getty Images.
What management had to say
Emergent's CEO, Dan Abdun-Nabi, is retiring at the beginning of April, but he is convinced that he's leaving the company in good hands with incoming CEO Bob Kramer:
Bob has been a committed leader since he first joined the company in 1999 as chief financial officer. As president and COO, Bob has extensive knowledge of all aspects of the company's operations and the ability to act decisively and strategically in the company's best interest, making him uniquely qualified to step into this role. I'm excited about Emergent's future and have full confidence in Bob's ability to lead the organization and to continue to create shareholder value.
CFO Rich Lindahl pointed out that the company's acquisitions over the last few years have helped Emergent be less dependent on BioThrax. "To illustrate the ongoing diversification of our revenue mix, note that as a percentage of total revenue, BioThrax represented 36% in 2018 versus 51% in the prior year," he said.
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Looking forward
Management is guiding for 2019 revenue of between $1.06 billion and $1.14 billion, a 41% increase over last year at the midpoint. Adjusted net income is expected to be in a range of $150 million to $180 million, up 36% at the midpoint.
Much of that growth is going to come in the second half of the year, as the company's current contract for smallpox vaccine ACAM2000 is wrapping up in the first quarter and a follow-on procurement contract still under negotiation is not expected to begin until the second half of the year. The switch from BioThrax to NuThrax will also help the company's gross margin in the second half, so investors should expect earnings to be even more weighted to the second half of the year.
